Atari - Latest Financial Woes @ gamesindustry.biz

November 20th, 2007, 21:54

The dire financial situation of Atari US has been in the news quite a bit lately. This article examines the latest statement from the struggling company in response to yesterday's announcement of "a second quarter net loss of USD 7.7 million, with net revenue down from USD 28.6 million to USD 13.3 million." As stated below, one source of possible additional funding includes the company's licensed and owned IP's :

With the company unlikely to receive funding from parent Infogrames, it is considering suspending current development projects, laying off more staff and selling its remaining intellectual property…
…"We continue to explore various alternatives to improve our financial position and secure other sources of financing which could include raising equity, forming both operational and financial strategic partnerships, entering into new arrangements to license intellectual property, and selling, licensing or sub-licensing selected owned intellectual property and licensed rights," said the publisher.

Originally Posted by kalniel
So what do you call the $5m Infogrames gave them to license the Test Drive franchise for the next 6 years?

Exactly. SEC filings need to be correct (or the people who sign off on them risk jail), so Atari's latest filings can be taken to the bank (literally). I suppose it may just be the difference between indicating a transaction and actually completing it. In other words, that injection of $5 mill isn't cast in stone and isn't certain enough to report to the SEC.

Originally Posted by Squeek
Exactly. SEC filings need to be correct (or the people who sign off on them risk jail), so Atari's latest filings can be taken to the bank (literally). I suppose it may just be the difference between indicating a transaction and actually completing it. In other words, that injection of $5 mill isn't cast in stone and isn't certain enough to report to the SEC.

I think it's more likely that it was made after the Q2 results (or whatever they were) were released. Ie, they lost the $7m or so, that was the financial result - the action taken was then the CEO leaving and the licensing of the TD franchise. But I only made the point to contest the gamesindustry.biz article which seemed to suggest Infogrames had washed their hands of the US branch - I don't think anything of the sort has happened.

Originally Posted by DarNoor
What affect will this have on The Witcher? Wasn't Atari the publisher?

Nill effect. Atari Inc will still continue to distribute it in North America.

Atari Europe who had more to do with The Witcher are a different company altogether, and are wholly privately owned by Infogrames. As such we can't know their results exactly, but they don't seem to be having the same troubles - Infogrames seems to do better in the European market.

It's always scary to try to interpret the financial-speak antics of companies in SEC filings, however I got the impression from this statement that it is indeed as Squeek said, that any money they expect to get from Infogrames is not assured:

"However, IESA has its own financial needs, and its ability to fund its subsidiaries’ operations, including ours, is limited. Therefore, there can be no assurance we will ultimately receive any funding from IESA…."

While not exactly "washing its hands", that does seem to indicate that Infogrames support will be limited at best. Also, to the normal human $5 mil sounds quite satisfyingly large, but to a company whose revenue fell by over 50% in the double digit millions, it's probably going to be gobbled up pretty fast if and when it does come through.